ST. PETERSBURG — For decades, the three vacant buildings have been encased in aluminum grillwork that makes them look like enormous cheese graters. As the rest of downtown roars back to life, the block they sit on remains a dead zone in the heart of the city.But that soon could change.Once-warring owners of the 400 block of Central Avenue have reached what they call a "historic agreement" that could finally free the property for redevelopment. First States Investors, a California real estate investment trust, and the Pheil family have long wrangled over leases that require the trust to pay $700,000 a year in rent for a crumbling parking garage and buildings haunted by vandals, the homeless and a mummified cat. But the two sides have reached a deal whereby First States would demolish the buildings and pay the Pheils an undisclosed amount to get out of the leases. The family, which owns a third of the block, would also get the two-thirds now owned by First States."We're excited to be able to reach an agreement with the family," David Snyder, speaking for the trust, told the Tampa Bay Times editorial board Tuesday. "A year ago, we never thought that would happen."Now, Snyder said, the only sticking point is whether the city will approve demolition of the buildings, including one that housed the 1920s-era Pheil Hotel and movie theater. Although the current owners say the buildings are too decrepit and awkwardly configured to salvage, others say they have historical significance and should be considered for preservation. The 400 block of Central has long been a black hole as new apartment and condo projects gobbled up most of the remaining developable parcels in the city's booming downtown. After the hotel and theater closed decades ago, the buildings were used by First Union and Wachovia until they were finally abandoned in 2006.Descendants of A.C. Pheil, an early mayor of St. Petersburg, had little incentive to sell their part of the block because they were assured of substantial income from leases that don't expire until Halloween 2058. First States got stuck with the leases in 2004 when it acquired hundreds of properties, including those in St. Petersburg, after foreclosing on a loan.Since then, First States had tried unsuccessfully to get out of the leases. But as the real estate market picked up, both sides saw advantages in settling their dispute. With its own portfolio gaining in value, First States "is in a position to make a deal it's not too thrilled with but willing to do," Snyder said. "We are making the Pheils essentially whole to what they're looking for."The Pheils, for their part, didn't want to miss out on St. Petersburg's current development boom. They already have begun marketing the property and hope to sell it for as much as $15 million."The major condition is that we tear down the buildings," Snyder said. "It's important to note that even the scions of the family that built them don't want them."Attorney Donald Mastry, representing both ownership groups in dealings with the city, said he will apply for a demolition permit as soon as all of the Pheils have signed the agreement to which they verbally consented. The buildings are on a list of properties eligible for landmark designation, meaning the city must give 30 days' notice to anyone who might oppose demolition. Peter Belmont, vice president of St. Petersburg Preservation, said the organization has not decided whether to seek landmark status for the buildings, which would prevent their destruction."We think they would be feasible to reuse and we do think there should be efforts made to do that," he said, noting that other old buildings once considered candidates for the wrecking ball have been successfully repurposed. Snyder, though, said engineering studies show that it would cost as much to bring the three-building complex up to code as it would to erect a brand new building. "The problem is that it's functionally obsolete," he said. "We could throw money at it and still never have made money between the land leases and other costs."On a recent tour of the buildings, a Times reporter and photographer observed a combination time capsule and mazelike warren of small rooms and narrow hallways. Most of the former bank offices are devoid of furniture except for one where the desiccated carcass of a longtime inhabitant — a flea-ridden cat — lies on a worn carpet near an old beige sofa. The floor of another office is covered with unopened mail, including a 1974 tax bill from the office of O. Sanford Jasper, then Pinellas County's tax collector. The walk-in bank vaults are still there, one with the yellowed notice "Telegrams: Will receive attention at all hours" pasted to its massive steel door. Though vacant for almost a decade, the buildings show signs of recent activity including rolling papers, crushed beer cans and a Starbucks Christmas cup. Vandals and the homeless "have unlimited time and ways to figure out how to get in," said Leonard Venckus, a general contractor hired by the owners to escort police and others around the gloomy interior littered with broken glass, twisted metal and fallen chunks of ceiling tile. In several rooms, walls are spray-painted with graffiti, including an enormous mural of cartoon characters Tom and Jerry. "They sign the graffiti," Venckus said of the more talented vandals. "It's not like they're trying to hide who they are, but hey, it's trespassing."In an attempt to modernize the look of the buildings, the aluminium grating was bolted to the exteriors in the 1960s, creating the cheese grater effect. "Obviously, even at that time, they thought the buildings were unattractive," said Venckus, who acknowledged feeling "no love" for them like he does for some of the city's other vintage structures. Preservationists who took a tour, though, were impressed by the tilework on the outside of the original 1920s building. While interior areas are a mess, old postcards show architectural features there, too, that might be worthy of preservation, said Stephanie Ferrell, a Tampa architect involved in restoring that city's old federal courthouse. "I do think (the buildings) are significant historically and significant architecturally," she said. "Inside the buildings, it's hard to tell without taking down the drop ceilings and removing the modern finishings, but when you peel that away and investigate, I would expect much of the interior to be intact."The current owners, however, say that interior has so many closely spaced, load-bearing columns that it would be hard, if not impossible, to create the airy, open look sought in modern offices. One exception is the former bank lobby, still lined with teller cages. Its ceiling soars so high that a mezzanine was added on one side to create extra office space. But the mezzanine flooring extends to the midpoint of the ground-floor windows, creating the disorienting impression that the windows on the second floor are only knee-high.Looking at them, one gets the feeling Alice might have had when she suddenly started growing in the White Rabbit's house. Susan Taylor Martin can be reached at [email protected] or (727) 893-8642. Follow @susanskate.